# Part E: NFA Creditor/Debtor Detail

Investigates whether Z captures return-composition effects beyond what NFA/GDP measures.

## Model Comparison

| Model | Dep Var | N | Countries | R² | ρ |
|-------|---------|---|-----------|----|----|
| M3: Z → Income Bal (baseline) | income_balance_gdp | 3,907 | 150 | 0.129 | 0.808 |
| M7: NFA split → Income Bal | income_balance_gdp | 3,907 | 150 | 0.136 | 0.807 |
| M7-trade: NFA split → Trade Bal | trade_balance_gdp | 3,937 | 150 | 0.274 | 0.870 |
| M7-ca: NFA split → CA | ca_gdp | 4,406 | 162 | 0.211 | 0.577 |

## Key Coefficients

| Variable | Model | Coef | SE | p-value |
|----------|-------|------|----|---------|
| Z_1 | M3: Z → Income Bal (baseline) | 41.3648*** | 15.4488 | 0.0074 |
| Z_1 | M7: NFA split → Income Bal | 39.1696** | 15.4323 | 0.0112 |
| Z_1 | M7-trade: NFA split → Trade Bal | -1.5227 | 19.7643 | 0.9386 |
| Z_1 | M7-ca: NFA split → CA | -2.6143 | 11.8646 | 0.8256 |
| Z_2 | M3: Z → Income Bal (baseline) | -6.3992*** | 2.3132 | 0.0057 |
| Z_2 | M7: NFA split → Income Bal | -6.0330*** | 2.3122 | 0.0091 |
| Z_2 | M7-trade: NFA split → Trade Bal | -0.2141 | 2.9653 | 0.9424 |
| Z_2 | M7-ca: NFA split → CA | 0.6650 | 1.7811 | 0.7089 |
| Z_3 | M3: Z → Income Bal (baseline) | 0.2671*** | 0.0941 | 0.0046 |
| Z_3 | M7: NFA split → Income Bal | 0.2510*** | 0.0941 | 0.0077 |
| Z_3 | M7-trade: NFA split → Trade Bal | 0.0087 | 0.1209 | 0.9429 |
| Z_3 | M7-ca: NFA split → CA | -0.0362 | 0.0726 | 0.6182 |
| nfa_gdp_lag | M3: Z → Income Bal (baseline) | -0.6909*** | 0.2204 | 0.0017 |
| nfa_positive | M7: NFA split → Income Bal | -1.0861*** | 0.3045 | 0.0004 |
| nfa_positive | M7-trade: NFA split → Trade Bal | -0.1993 | 0.3390 | 0.5565 |
| nfa_positive | M7-ca: NFA split → CA | -0.6372** | 0.2912 | 0.0287 |
| nfa_negative | M7: NFA split → Income Bal | -0.2040 | 0.3346 | 0.5420 |
| nfa_negative | M7-trade: NFA split → Trade Bal | -0.7885** | 0.3574 | 0.0274 |
| nfa_negative | M7-ca: NFA split → CA | 1.3829*** | 0.3649 | 0.0002 |

## NFA-Income Balance Correlations by Group

| Group | N | Countries | Corr(NFA, IB) |
|-------|---|-----------|---------------|
| Creditor (NFA>0) | 1,376 | 91 | 0.271 |
| Debtor (NFA<0) | 4,804 | 156 | 0.067 |

## Interpretation

NFA/GDP captures the stock of accumulated positions but not the composition or return differentials across asset classes. Demographics may predict the income balance through both the accumulation channel (which NFA captures) and the composition/return channel (which NFA does not). If Z remains significant conditional on NFA, this is consistent with demographics capturing return-composition effects beyond what NFA/GDP measures.